Why Do We Spend Money We Don't Have

#3. Why do we spend money we don't have

Why do we spend money we don’t have, and what can we do about it?

This is something a lot of us do, and something that causes all kinds of problems in our lives. In this episode we’ll demonstrate why our brains don’t always think $5 is $5 by learning about a trick called ‘anchoring’ and how it shapes the way we respond to price tags.

Episode: 3

Duration: 22:52

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The Experiment

Why do we spend money we don’t have? Well it may have something to do with a little thing that is known in the behavioural economics world as ‘price anchoring’ and ‘opportunity cost’.

Take the quiz below to find out if you would be affected by price anchoring. While this test is obviously just a bit of fun and can’t tell you exactly how you’d respond in real life, nor can it give you any financial advice, it can be a good way to get yourself thinking. Take the quiz below to find out if you understand “price anchoring.”

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